Tin prices rose almost 3% in London Metal Exchange trading on Tuesday after an industry trade group organizing a mineral traceability project for tin and tantalum minerals exported from the Democratic Republic of Congo (DRC) said a rushed schedule required by a new US law would create an effective embargo by next April.
Three-month tin prices on the LME hit a record high of $27,500 per metric tonne on Tuesday and settled at $27,300 in official pricing.
Tin, tantalum, tungsten and gold are among metals covered by conflict minerals requirements of the US financial reform law enacted in July. The law requires the Securities and Exchange Commission to set up a reporting system for manufacturers using minerals from the DRC and neighboring countries.
The trade group, United Kingdom-based ITRI Ltd., launched its tin and tantalum supply chain traceability effort last March ahead of enactment of US legislation but said in a statement this week that market pressures created by the US law were pushing it to full implementation of a tagging system for conflict minerals by the end of next March.
"It is likely that cassiterite [the mineral source for tin] and tantalum minerals from the central African region that are not tagged, and therefore which will not possess verifiable chain-of-custody data, will no longer be acceptable to the international tin or tantalum markets after that date," officials said in the statement.
The tagging requirement will be apply not only to minerals produced in all provinces of the DRC but also those mined in adjoining countries such as Rwanda, Burundi and Uganda which are also implicated by the US law, they said.
Kay Nimmo, ITRI manager for sustainability and regulatory affairs, said that while ITRI and the industry supply chain had been working to address the conflict minerals issue through a phased and practical system they had found it "extremely challenging to meet this target date of end March 2011. We are not just talking about implementing a system in areas where conflict funding is known to exist, but in other provinces of the DRC, and other adjoining countries, an area covering practically a third of Africa.
"Realistically, with the resources available to us, it is unlikely that all cassiterite from the region can be covered by the system in time and many current production areas will unfortunately as a result be subject to an effective embargo by next April."
The ITRI supply chain project was being piloted in the DRC provinces of South and North Kivu but has been brought to a stand-still by a general mining suspension announced by DRC President Joseph Kabila in early September.
ITRI officials said it would not be possible to resume work on the pilot in either troubled Eastern province, or in Maniema, until the DRC Ministry of Mines completes plans to improve security and allows resumption of mining. They added that there is currently no legal mining activity to trace and that the pilot project's funding, which relies on a levy on trading exports, has been halted.
"Our original plan to expand the project by gradual training of staff and a progression from one mine to the next is no longer feasible due to the almost immediate deadline effectively being imposed by the US conflict minerals legislation and other factors beyond our control," Nimmo said, adding that the project urgently needs to secure funding of around US$6million to have any chance of reaching its implementation target.
The traceability system is also starting up in Rwanda in conjunction with the country's geology and mines authority. Full implementation is also targeted there by the end of March but resourcing issues exist and are also likely to limit progress there, they said.
The DRC is expected to supply 5% of the world's tin this year and four central African countries produce about 14% of the world's tantalum, which is heavily used in electronics and camera lenses. Continuing conflict in eastern Congo has followed two wars between 1996 and 2003 that involved eight African nations 25 armed groups, killing an estimated five million people.
Phil Burgert is managing editor of ResourceInvestor.com. He can be contacted at pburgert@resourceinvestor.com.
